Name: Lloyds Banking Group at FinovateEurope 2024 – Fintech funding trends
Uploaded: 2024-03-14T16:14:35.868Z
Duration: 597.56
Description: At the FinovateEurope conference in London, FinTech Futures spoke with Robin Scher, Head of Fintech Investment at Lloyds Banking Group, to discuss the big fintech funding trends in 2024.

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{{00:00:04}}
Hi there, I'm Cameron Emanuel-Burns
reporting for Fintech Futures

{{00:00:08}}
here at Finovate Europe and I'm
delighted to say that I'm joined

{{00:00:10}}
by Robin Scher, Head of Fintech
Investment at Lloyds Banking Group.

{{00:00:14}}
How are you today?

{{00:00:15}}
Very well, thank you.

{{00:00:15}}
How are you?

{{00:00:16}}
I'm brilliant.

{{00:00:17}}
And have you had a good
time so far at Finovate?

{{00:00:19}}
It's been great.

{{00:00:19}}
Yeah, really good conference.

{{00:00:21}}
Super.

{{00:00:21}}
I thought we could start off with
just trying to understand what

{{00:00:23}}
is Lloyds Fintech Partnership
investment strategy at the moment?

{{00:00:28}}
Yeah, sure.

{{00:00:28}}
So look, we've We've got 65, 000 people
that work for Lloyds and I've got the best

{{00:00:32}}
job out of all of them because a couple
of years ago we set up this corporate

{{00:00:35}}
VC essentially investing in early stage.

{{00:00:39}}
So anywhere really from C to series
B FinTech investing 2 million to 15

{{00:00:44}}
million pounds into these kind of
growing companies and helping these

{{00:00:48}}
companies partner with Lloyds and
assisting them through the journey.

{{00:00:51}}
And also acting as a kind of
financial investor as well.

{{00:00:54}}
So sitting on boards, providing support
it's been a brilliant ride so far.

{{00:00:58}}
We're about to.

{{00:00:59}}
Invest in our ninth company
over the last kind of 18 months

{{00:01:03}}
that we've been investing.

{{00:01:05}}
And it's been a really brilliant ride.

{{00:01:08}}
So we've had a first budget of 50.

{{00:01:10}}
50 million pounds to invest.

{{00:01:13}}
We're about to close that and we've
just been given another 50 to invest.

{{00:01:18}}
Yeah, it's been great so far.

{{00:01:19}}
A really busy couple of years.

{{00:01:21}}
It sounds really exciting.

{{00:01:22}}
And I've actually just
saw you did a panel.

{{00:01:24}}
You were speaking at a
panel just before this.

{{00:01:27}}
on smart money being invested in,
FinTech, and I heard that you said

{{00:01:30}}
that you'd be I thought you had the
coolest job at Lloyds, and I have to

{{00:01:32}}
say, I think I agree with you actually.

{{00:01:35}}
But for those who weren't able
to attend that talk, what are

{{00:01:38}}
your key takeaways from it?

{{00:01:40}}
So where is the smart money investing?

{{00:01:43}}
It's a really difficult one.

{{00:01:44}}
I get out my crystal ball and say,
yeah, say where, but I suppose if I

{{00:01:47}}
look at specific domains I like regtech.

{{00:01:50}}
We invested in a company called
Aisin last year which is a

{{00:01:55}}
really, good regtech company.

{{00:01:56}}
I think they've got strong fundamentals,
so Road tech's a really good one.

{{00:02:00}}
Anything kind of fraud, financial
crime, cybersecurity, I think

{{00:02:04}}
banks are interested in the, bad
guys are getting better, worse.

{{00:02:09}}
They're, improving in their badness,
so investing in something to keep them

{{00:02:13}}
out is gonna be really, important.

{{00:02:16}}
If I look at another kind of area, so
Lloyd's has a huge insurance arm as

{{00:02:21}}
well, and I think for me, InsureTech is
a really, interesting vertical that is.

{{00:02:28}}
Yet to be truly picked up on.

{{00:02:31}}
So I think that could be a really
focus, real focus area just in

{{00:02:35}}
general in 2024, for investors might
be 20, 25, might be a bit later.

{{00:02:42}}
So it's always been one of those that's
been on the cusp of true transformation.

{{00:02:46}}
So I like that as an area.

{{00:02:47}}
And then if I look at kind of a.

{{00:02:49}}
specific demographic, I'd
probably go with with kind of

{{00:02:52}}
the mass affluent demographic.

{{00:02:54}}
A lot of the the banks have just
released their annual results.

{{00:02:57}}
A lot of them are talking about their
strategies and everyone seems to

{{00:02:59}}
be trying to protect or grow their
revenue pools in mass affluent.

{{00:03:03}}
And I think that's an area
that clearly needs a really

{{00:03:07}}
good kind of digital journey.

{{00:03:08}}
So yeah, I think that there's some areas.

{{00:03:10}}
What I haven't mentioned is Gen AI,
because I think everyone is at the moment.

{{00:03:16}}
Where are we?

{{00:03:16}}
Kind of February 2024.

{{00:03:18}}
So this is going to get
dated very, quickly.

{{00:03:20}}
But I'd say everyone is both excited,
but also a little bit scared of Gen AI.

{{00:03:24}}
We see that it could be absolutely
huge, but we've also got to be really

{{00:03:27}}
cognizant of what the big vendors do.

{{00:03:29}}
And it's been changing kind of
week on week about where people are

{{00:03:32}}
going to be playing in that space.

{{00:03:34}}
So I think if there's a Gen AI firm with
a really, narrow niche that they've spent

{{00:03:39}}
a lot of time doing R& D on and they're
well ahead of the game then they could

{{00:03:43}}
be a really interesting player as well.

{{00:03:45}}
Does that kind of, links into what
I'm next like to ask you about,

{{00:03:48}}
specifically Lloyds and obviously
you're head of the strategy.

{{00:03:51}}
What are the areas, you've said regtech
that you like particularly, what are

{{00:03:54}}
the areas if you had to list them that
Lloyds are particularly interested

{{00:03:58}}
in at the moment to invest in?

{{00:03:59}}
Yeah, so I suppose we've got anything
in the kind of enterprise technology, so

{{00:04:03}}
things that can make the kind of spaghetti
that runs within the Lloyds machine, just

{{00:04:07}}
a little bit smoother and straighter.

{{00:04:09}}
I think that's going to be key.

{{00:04:14}}
We like the idea of Gen AI, but as
I said, I don't know quite where

{{00:04:17}}
it's going to go, but I'd keep that
just as a kind of general theme that

{{00:04:20}}
we're going to be looking at, whether
we invest or not, I'm not sure.

{{00:04:23}}
We've got authentication, so that
could be anything from the know

{{00:04:28}}
your client, know your business.

{{00:04:30}}
It could really have fraud and
financial crime in there as well.

{{00:04:32}}
Digital identity kind of building
on the investment that we've already

{{00:04:35}}
made with with Yoti last year.

{{00:04:39}}
And then a couple of different, like
different verticals, but You've got

{{00:04:43}}
the kind of client propositions, so
anything that can improve the experience

{{00:04:47}}
of our business clients, and customer
or consumer propositions, so anything

{{00:04:50}}
that can improve the retail client base.

{{00:04:53}}
So it's really, wide, and inside that is
pretty much anything that you could even

{{00:04:57}}
link to FinTech, RegTech, InsureTech,
WealthTech, but I think those are

{{00:05:03}}
going to be the kind of general themes
of where we're looking at this year.

{{00:05:06}}
Clearly a lot of possibilities out there.

{{00:05:09}}
I think it's fair to say that
it's been a tough couple of years.

{{00:05:11}}
for FinTech investment amid a global
funding slowdown and obviously the

{{00:05:16}}
tough macro economic conditions.

{{00:05:18}}
Given the shape of the global
economy right now, is sentiment

{{00:05:21}}
still quite low do you think?

{{00:05:22}}
Or do you think this year
we'll end up seeing a bit

{{00:05:25}}
more positivity in this space?

{{00:05:27}}
I think, I'd love to say that
sentiment is picking up and it's high.

{{00:05:31}}
I really want to say that.

{{00:05:32}}
And I think for the early stage,
for kind of seed and series A,

{{00:05:36}}
sentiment never really fell away
and they've always been, doing okay.

{{00:05:40}}
What I was hoping for is
seeing a lot more kind of.

{{00:05:42}}
Series B and larger rounds coming
back because that's the bit

{{00:05:45}}
that hasn't happened as much.

{{00:05:48}}
So I thought that maybe Q2
this year it would pick up.

{{00:05:53}}
I read some analysis recently that kind
of showed that actually there's still of

{{00:05:58}}
all the companies that raised a Series A
in 2021 at these kind of wild valuations

{{00:06:04}}
that the VCs are still trying to protect
them and doing internal bridging rounds.

{{00:06:08}}
And I think there is still.

{{00:06:11}}
40 percent plus of those who still
haven't raised a bridging round,

{{00:06:15}}
haven't shut down, haven't been
acquired and haven't raised a Series B.

{{00:06:19}}
So still looking for funding.

{{00:06:21}}
And I worry that at least for the
first half of this year, VCs are

{{00:06:24}}
going to be very strongly focused on
still protecting their own portfolio

{{00:06:28}}
and these, kind of small little
internal bridging rounds, et cetera.

{{00:06:31}}
Now in the second half of this year,
kind of summer onwards, I'm really

{{00:06:35}}
hoping that it all picks up a lot.

{{00:06:36}}
I don't think valuations
will pick up massively.

{{00:06:38}}
I think valuations are now at a point
that is about right, here to stay.

{{00:06:43}}
Maybe even in the smaller,
stages go down a touch.

{{00:06:48}}
But I think, we're still a few months
at least away from from seeing the

{{00:06:52}}
dual float pick up in the larger scale.

{{00:06:54}}
To pick up what you were saying
there on the extortionate valuations

{{00:06:57}}
that we have seen we've been
seeing more down rounds of lakes.

{{00:07:01}}
And of course, huge company valuations
we were seeing in early 2021 have

{{00:07:05}}
been cut significantly in some cases.

{{00:07:07}}
Do you think this valuation
consolidation was needed in this space?

{{00:07:11}}
And do you think we've
now hit that fair level?

{{00:07:13}}
Yes and yes.

{{00:07:15}}
I think it absolutely was needed.

{{00:07:17}}
I think we've hit a pretty fair level.

{{00:07:20}}
What I would say is we've hit a
fair level for good companies.

{{00:07:24}}
So anyone who raised a Series B
last year who wasn't raising it

{{00:07:28}}
with Abridging Finance, or just just
trying to avoid a down round and their

{{00:07:33}}
VCs propping them up a little bit.

{{00:07:35}}
Anyone who raised a true Series B
is clearly has a very good company

{{00:07:40}}
and is raising exceptionally well.

{{00:07:42}}
So I would say those are true valuations
for very good and the right company

{{00:07:48}}
that people should be investing in.

{{00:07:49}}
So yeah, we've, I think we've hit
around the right space, and yeah,

{{00:07:54}}
but it's been a difficult time.

{{00:07:56}}
Thanks for that.

{{00:07:57}}
But to finish off, I'd really like to
know from your point of view, and also,

{{00:08:01}}
of course, speaking for Lloyds, What is
it, what characteristics in companies

{{00:08:05}}
do you look for to invest in, and what
would you advise Potential companies

{{00:08:09}}
who are looking to get investment from a
big organization like Lloyd's, what they

{{00:08:13}}
should be doing to enable that investment.

{{00:08:15}}
Yeah, okay, so I'll speak, for,
I'll speak for me, but I guess it's

{{00:08:19}}
also, for Lloyd's as well, right?

{{00:08:20}}
So what I, look for, I love a I
love a great founder and a founder

{{00:08:25}}
with like real true vision.

{{00:08:27}}
And I think that's absolutely
like one of the key things that

{{00:08:29}}
I look for right at the start.

{{00:08:31}}
I like to see like a
decent product market fit.

{{00:08:33}}
I like to look at things that are
trying to solve something fairly

{{00:08:37}}
niche, but fairly important.

{{00:08:40}}
Ideally that no one's ever
really tried to solve or no

{{00:08:42}}
one's really solved well before.

{{00:08:44}}
I like realism in that when you look
at a business model you can see that

{{00:08:50}}
if revenues are going to explode,
you've got a really good reason

{{00:08:54}}
why and you also see the cost kind
of following suit as well, right?

{{00:08:57}}
So it's not just I will keep costs
flat, but suddenly the revenue

{{00:09:00}}
is going to absolutely explode.

{{00:09:02}}
So a cost conscious
founder is always useful.

{{00:09:04}}
We are the the kind of UK's big
conservative retail and commercial bank.

{{00:09:10}}
And I'd say on top of all of that, I'd
like to see and understanding that when

{{00:09:16}}
you, if it's going to be and looking to
partner with us, that can take a while.

{{00:09:20}}
And I think that's a, if I sometimes get
a pitch deck in saying, oh, we've just

{{00:09:26}}
started up and we're going to partner
with our first bank and start making

{{00:09:29}}
money off them in three months, you can
look at that and think, so, I think it's,

{{00:09:33}}
that kind of realism of how long and
the effort that it takes to integrate

{{00:09:37}}
with and partner with a big institution.

{{00:09:39}}
Once you do that, the prize
is absolutely massive.

{{00:09:42}}
But a bit of realism around
that is always useful.

{{00:09:45}}
That was fascinating.

{{00:09:46}}
Thank you so much for taking the time
to speak to me today and I really

{{00:09:50}}
hope you enjoy the rest of Finovate.

{{00:09:50}}
Great.

{{00:09:51}}
so much.

{{00:09:51}}
It's been great.

{{00:09:52}}
Cheers.

Hi there, I'm Cameron Emanuel-Burns
reporting for Fintech Futures

here at Finovate Europe and I'm
delighted to say that I'm joined

by Robin Scher, Head of Fintech
Investment at Lloyds Banking Group.

And have you had a good
time so far at Finovate?

I thought we could start off with
just trying to understand what

is Lloyds Fintech Partnership
investment strategy at the moment?

So look, we've We've got 65, 000 people
that work for Lloyds and I've got the best

job out of all of them because a couple
of years ago we set up this corporate

So anywhere really from C to series
B FinTech investing 2 million to 15

million pounds into these kind of
growing companies and helping these

companies partner with Lloyds and
assisting them through the journey.

And also acting as a kind of
financial investor as well.

So sitting on boards, providing support
it's been a brilliant ride so far.

Invest in our ninth company
over the last kind of 18 months

We're about to close that and we've
just been given another 50 to invest.

And I've actually just
saw you did a panel.

You were speaking at a
panel just before this.

on smart money being invested in,
FinTech, and I heard that you said

that you'd be I thought you had the
coolest job at Lloyds, and I have to

But for those who weren't able
to attend that talk, what are

I get out my crystal ball and say,
yeah, say where, but I suppose if I

We invested in a company called
Aisin last year which is a

I think they've got strong fundamentals,
so Road tech's a really good one.

Anything kind of fraud, financial
crime, cybersecurity, I think

banks are interested in the, bad
guys are getting better, worse.

They're, improving in their badness,
so investing in something to keep them

If I look at another kind of area, so
Lloyd's has a huge insurance arm as

well, and I think for me, InsureTech is
a really, interesting vertical that is.

So I think that could be a really
focus, real focus area just in

general in 2024, for investors might
be 20, 25, might be a bit later.

So it's always been one of those that's
been on the cusp of true transformation.

specific demographic, I'd
probably go with with kind of

A lot of the the banks have just
released their annual results.

A lot of them are talking about their
strategies and everyone seems to

be trying to protect or grow their
revenue pools in mass affluent.

And I think that's an area
that clearly needs a really

So yeah, I think that there's some areas.

What I haven't mentioned is Gen AI,
because I think everyone is at the moment.

So this is going to get
dated very, quickly.

But I'd say everyone is both excited,
but also a little bit scared of Gen AI.

We see that it could be absolutely
huge, but we've also got to be really

And it's been changing kind of
week on week about where people are

So I think if there's a Gen AI firm with
a really, narrow niche that they've spent

a lot of time doing R& D on and they're
well ahead of the game then they could

Does that kind of, links into what
I'm next like to ask you about,

specifically Lloyds and obviously
you're head of the strategy.

What are the areas, you've said regtech
that you like particularly, what are

the areas if you had to list them that
Lloyds are particularly interested

Yeah, so I suppose we've got anything
in the kind of enterprise technology, so

things that can make the kind of spaghetti
that runs within the Lloyds machine, just

We like the idea of Gen AI, but as
I said, I don't know quite where

it's going to go, but I'd keep that
just as a kind of general theme that

we're going to be looking at, whether
we invest or not, I'm not sure.

We've got authentication, so that
could be anything from the know

It could really have fraud and
financial crime in there as well.

Digital identity kind of building
on the investment that we've already

And then a couple of different, like
different verticals, but You've got

the kind of client propositions, so
anything that can improve the experience

of our business clients, and customer
or consumer propositions, so anything

So it's really, wide, and inside that is
pretty much anything that you could even

FinTech Futures

Expert Insight

At the FinovateEurope conference in London, FinTech Futures spoke with Robin Scher, Head of Fintech Investment at Lloyds Banking Group, to discuss the big fintech funding trends in 2024.